Investors in Aradel Holdings Plc, Nigeria’s newest publicly listed company, have suffered a loss of N208 billion just two days after its shares debuted on the Nigerian Exchange Limited (NGX).
The company’s stock dropped by 5.85% on Wednesday, reducing its market capitalization from N3.56 trillion to N3.35 trillion. This sharp decline contributed to a broader sell-off in the domestic market.
Aradel Holdings, an integrated energy company, listed 4.34 billion shares on the NGX Main Board through a “Listing by Introduction” on October 14, 2024. The initial share price was set at N702.69, boosting the exchange’s market capitalization by N3.05 trillion, marking a significant milestone for the oil and gas sector in Nigeria’s stock market.
The company’s stock saw early success, with a 10% gain on Monday, followed by another 6% rise on Tuesday, bringing its market capitalization to N3.56 trillion. However, by Wednesday, the momentum shifted, and the stock price dropped to N720 per share from N820 earlier that day. This N48 per share decline caused a 0.25% drop in the All-Share Index, which fell to 98,291.53 points.
The sudden downturn in Aradel’s stock price has raised concerns among investors, highlighting cautious sentiment in the market amid broader economic uncertainties. While excitement initially surrounded Aradel’s listing, analysts now emphasize the importance of investor caution as the domestic bourse continues to face challenges.
Chief Operating Officer of Investdata Consulting Limited, Ambrose Omorodion, commented that the decline reflects a surge in the number of shares following a share split. He noted that this has allowed shareholders to sell off their additional shares and realize profits, particularly as the stock may have been overpriced at its listing price of N702.
“The rally over the first two days was expected before today’s correction. However, this doesn’t undermine the company’s strong fundamentals. Aradel maintains impressive corporate governance, and investors are eagerly awaiting the third-quarter results, which may include an interim dividend,” Omorodion said.
Aradel Holdings’ performance will likely remain a focal point in the coming weeks as investors watch for signs of either a short-term market correction or deeper concerns about the company’s long-term outlook.
The overall market saw bearish sentiments, led by profit-taking in Aradel (-5.85%), Okomu Oil (-6.86%), and Nestle (-2.25%). These declines overshadowed gains from Dangote Sugar (+9.69%) and Oando (+3.99%), as 23 laggards outpaced 22 gainers. Deap Capital (+10.00%) led the gainers, while Custodian (-8.98%) topped the decliners.
